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New Ontario Election Finance Laws Take Effect January 1, 2017

A new election finance regime will take effect in Ontario in 2017, with significant implications for elected officials, candidates, donors and third-party advertisers.

Under the new regime, corporate and union contributions are prohibited, individual contribution limits are reduced, and there are new restrictions on fundraising events. To offset the resulting loss in fundraising income, registered political parties and constituency associations will receive public quarterly allowances based on votes in the last general election.

In addition, the act regulates nomination contestant finances for the first time, further restricts certain loan guarantees, and further regulates political advertising spending for third parties and registered political parties.

An Act to amend various statutes with respect to election matters (new Act) received royal assent in Ontario on December 5, 2016, and mostly takes effect January 1, 2017, with the application of new rules to nomination contestants taking effect on July 1, 2017.

CONTRIBUTIONS

Previously, corporations and trade unions have been permitted to make contributions to parties, constituency associations, candidates and leadership contestants up to relatively generous limits (i.e., C$7,500 to a registered party) with a second separate but identical limit for campaign periods.

The new Act imposes a restriction that prohibits corporations and trade unions from making any contributions. Going forward, only individuals will be able to make contributions. Under the provisions of the new Act, an individual may contribute no more than C$1,200 to any registered political party in a calendar year (with the limits increasing in future years by an indexation factor).

LOANS AND GUARANTEES

Loan guarantees now fall within the definition of a “contribution”, and so corporations and trade unions will also be prohibited from acting as guarantors for any loan made to a party, candidate, nomination contestant or leadership contestant.

The new Act also imposes new rules as to when loans must be repaid. Loans to nomination contestants, leadership contestants and election candidates must be repaid within two years. Loans to registered parties and riding associations can be repaid in accordance with their commercial terms, but cannot be extended by more than two years.

ATTENDANCE AT POLITICAL FUNDRAISING EVENTS

The new Act adds a provision that prohibits certain individuals (or categories of individuals) from attending a political fundraising event, including a member of the Assembly, a leader of a registered party, a nomination contestant, candidate or leadership contestant registered under the Election Finances Act and certain political staff.

This restriction is not included in the federal election finance legislation and is new to the Canadian landscape. It will almost certainly significantly curtail fundraising by provincial political parties through events, meaning greater emphasis on direct mail and digital fundraising.

QUARTERLY ALLOWANCES

To offset the reduction in revenue that will result from the new restrictions, the four principal registered political parties will receive public allowances ranging from C$630,637.63 in 2017 (for the Green Party of Ontario) to C$5,055,097.49 in 2017 (for the Ontario Liberal Party), paid in quarterly instalments. The allowance is based on votes received in the most recent general election, starting in 2017 at C$0.678 per vote received, and ticking down by 2021 to C$0.510 per vote received.

NOMINATION CONTESTANTS

A person seeking endorsement as an official party candidate for an electoral district will not be subject to the fundraising and finance regime of the new Act, effective July 1, 2017.

POLITICAL ADVERTISING SPENDING

Certain provisions in the new Act restrict the amount of political advertising dollars that both third parties and registered political parties can incur during certain periods.

For third parties, the spending limits will be C$4,000 in any electoral district during any election period and C$100,000 in total during any election period. Further, third parties will have a spending limit of C$24,000 on political advertising in a specific electoral district during the six-month period immediately before the issue of a writ of election for a general election and a limit of C$600,000 in total for the same purpose during the same six-month period leading up to a general election.

For registered political parties, the spending limit will be $1-million for total political advertising expenses incurred during the six-month period immediately before the issue of a writ of election for a general election.